India has secured an indefinite peace clause at the WTO under which its existing food subsidy programmes will not be challenged if they breach the 10% limit

India’s public procurement of rice stood at $2 billion, or 6% of total paddy produced, in 2015-16. Photo: iStock

New Delhi: India has told the World Trade Organization (WTO) that its public procurement of rice stood at $2 billion in 2015-16, or around 6% of the total value of paddy produced in the country, well within the 10% limit mandated by the multilateral trade body.

In the absence of a deal at the WTO ministerial meeting held in Buenos Aires in December to allow developing countries a free hand to procure staples for their subsidized food programmes, India seems to have fast-tracked its food subsidy notification obligations at the multilateral body to use an interim reprieve agreed in 2013 to ensure it does not violate WTO rules. So far it had notified its food subsidy programmes till 2013-14.

“We have notified food subsidies for 2014-15 and 2015-16. We are working on notifying subsidy levels for the remaining two years. Our food subsidy level was below 6% in 2015-16 and we do not see it significantly rising in recent years,” a commerce ministry official said on condition of anonymity.

The government’s total procurement for public distribution of food items, such as rice, wheat, pulses, and cotton, declined to $15.6 billion in 2015-16 from $17.1 billion a year ago as the rupee depreciated. India’s support for irrigation, fertilizers and electricity to low-income and resource-poor farmers, which is not actionable under WTO rules, also declined to $23.6 billion in 2015-16 from $24.8 billion a year ago.

WTO rules cap government procurement for subsidized food programmes by developing countries at 10% of the total value of agricultural production based on 1986-88 prices and are always reported in dollar terms.

India has secured an indefinite peace clause at the WTO under which its existing food subsidy programmes will not be challenged if they breach the 10% limit. However, the peace clause comes with onerous obligation under which countries need to notify their food subsidy levels to WTO till the previous year. Such countries are also not allowed to start any new subsidized food programme after those that existed till 2013.

India says it has covered all staple foods under its current public distribution system and does not need to add any new food item.